Private Health Plans: An Overview

This page provides an overview of private health plans in relation to audiology and speech-language pathology services including information on coverage, reimbursement, appealing denials, and determining fees.

Types of Health Plans

Private health plans are offered by commercial insurance companies, such as Aetna, Cigna, and John Hancock and health benefits companies such as BlueCross BlueShield Plans. Private health plans are either indemnity (fee-for-service) plans, or managed care plans, such as health maintenance organizations (HMOs), and preferred provider organizations (PPOs). Managed care plans control or "manage" health care spending by closely monitoring how providers treat patients. Over time, the distinctions between these kinds of plans have begun to blur. Some indemnity plans offer managed care-type options, while some managed care plans offer members providers who are "outside" of the plan.

Coverage of Speech-Language Pathology & Audiology Services

Outpatient speech-language pathology and audiology services are often covered by health plans, but with limitations. Services delivered to inpatients are routinely included in basic hospital coverage. Many insurance companies provide coverage for communication disorders associated with illnesses or accidents, but often exclude those disorders that have a developmental or congenital etiology.

Nearly all insurers cover audiological diagnostic services which are required by a physician to establish a diagnosis. Evaluations to detect hearing loss and services related to degenerative hearing loss may or may not be covered. Hearing aids are covered by some plans when the hearing loss results from an illness or injury, but many insurers exclude hearing aids.

Clinicians should ask their patients to determine their health plan policy's coverage before the first visit. It is the patient's responsibility to pay for services rendered if the services are not covered. There may be deductibles and copayments even if most charges are covered.

Reimbursement

Reimbursement may be restricted to certain provider settings (hospitals or clinics) or only to licensed practitioners. A physician may have to refer the patient to a service provider or "prescribe" a speech-language pathology or audiology treatment.

Clinicians will need to determine what claim forms to use, and if the enrollee will need to receive written authorization for services from their primary care physician. A patient may be required to see only those speech-language pathologists and audiologists approved by the health plan.

Medical Coding

A key to proper reimbursement is coding your services appropriately. If you want to get paid for what you do, you have to speak the language of coding. There are two basic medical coding systems [PDF] to use in communicating with payers: the International Classification of Diseases, 9th Revision (ICD-9) which is tied to medical necessity, and the AMA's Current Procedural Terminology (CPT) which provides codes for procedures and services.

Payment Methods

You can expect to be reimbursed in either of two ways: discounted fee-for-service where the provider agrees to provide services to enrollees of a health plan at fees below the normal rate; or capitation, where the insurer pays the provider an agreed-upon amount of money per enrollee per month for a defined set of services, say $0.40 per enrollee per month to provide audiological services, or $0.04 per enrollee per month for speech-language pathology services.

Before contracting with a payer, obtain a copy of their fee schedule. Payers develop fee schedules in much the same way as providers develop their fee schedules, either using a market-driven approach, a relative value approach (each procedure is assigned a relative work value related to the skill, time and risk involved in performing that service), or a blended approach.

Filing a Claim & Appealing a Denial

Claims

The clinician must decide whether the patient or provider (clinician) will file claims for services rendered. If the patient files, you will need to give the patient the necessary information (a bill with CPT procedure codes, ICD-9 diagnostic codes, charges, and supporting documentation). If you have a signed agreement with a health plan, you may be required to send the claim directly to them.

Remember, health plan coverage is an arrangement between patient and health plan. Providers need to provide necessary documentation, but always make it clear to the patient that they are ultimately responsible for payment of services.

You should be aware of the Health Insurance Portability and Accountability Act (HIPAA) that addresses privacy of and electronic transmission of patient information. As one clinician noted, HIPAA means you must "pay more attention to records, what patient information is collected, what is transmitted or shared, and how information is stored and protected."

Review Patient's Policy

Review the patient's insurance policy to see if audiology or speech-language pathology services are covered. Is the policy clear or vague? Claim decisions are based on contract wording, so review the section describing your services carefully.

The clinician can contact the Provider Relations Department to determine his/her status as a provider. Is your setting recognized (independent practice, outpatient)? Do you need a provider number to file claims? Is there a specific claim form to use? What documentation is necessary (weekly notes, evaluation report)? Is pre-authorization necessary?

Preparing A Claim

You will provide patient information as well as diagnosis (ICD-9) and procedural codes (CPT). You must be able to support your coding decisions with patient history, physician referral notes, evaluation results, and other documentation that supports your professional judgement as to the cause of the patient's condition and required treatment. Be sure to obtain patient permission to supply the health plan with relevant documentation.

National Provider Identifiers (NPIs)

All health care providers and organizations are eligible to receive NPIs. Effective May 27, 2007, providers and organizations that are defined as covered entities under HIPAA will be required to have an NPI in order to identify themselves in HIPAA standard transactions. The NPI will replace the current health care provider numbers. It takes less than 5 minutes to apply online and the number is issued within a few minutes. The provider type is 23 (speech, language, hearing service provider). The taxonomy number for audiologist is 231H00000X. The taxonomy number for SLP is 235Z00000X.

Waiting For A Decision

Most states require health plans to pay or deny a claim within 30 days. If a health plan continues to deny a claim you believe should be paid, or if the health plan fails to make any decision, send a well-documented account of the claim to the state insurance commission.

Appealing a Denial

If you receive a claim denial and do not agree with the decision, consider appealing the denial. Go back and review the patient's insurance policy for coverage information. The explanation of benefits (EOB) letter from the health plan is the key to payment or denial status. If the coverage language supports payment, write an appeal letter describing the disorder and its medical nature, and reference the coverage policy paragraph that shows how your treatment fits coverage criteria.

The health plan may conduct an internal review of the denial. If all levels of appeal are exhausted, and you still believe your treatment meets coverage definitions, consider taking the case to the external claim review level. Currently, 42 states have an external review process (go to the Kaiser Family Foundation's Consumer Guide to see each state's procedure and contact points).

Determining Fees

Health care providers have some flexibility when setting private fees. Unlike Medicare, private payers employ a variety of payment methodologies. Clinicians should choose a pricing philosophy and gather available charge information in order to establish a rational fee schedule and to negotiate health care contracts.

Available Fee Data

You can compare your fees with the Medicare Physician Fee Schedule. Remember, in determining fees for your services, avoid any method that can be construed as price-fixing, such as discussing fees with other local practices. Setting prices in collusion with colleagues is illegal.

Choosing a Pricing Philosophy

Setting medical fees uses two basic pricing philosophies: a market-driven approach and a relative value approach. A market-driven approach (known also as UCR: usual, customary, and reasonable) ties medical pricing to industry trends in local communities and assumes patients are price-sensitive. With a relative value approach, fees are tied to the "worth" of a procedure taking into account provider skill, time, and risk. The Medicare Physician Fee Schedule uses the relative value method.

Establishing fees takes care. Fees that are too high will lead to disputes with patients and payers, and fees that are too low will result in inadequate reimbursement.

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About Us

The American Speech-Language-Hearing Association (ASHA) is the national professional, scientific, and credentialing association for 182,000 members and affiliates who are audiologists; speech-language pathologists; speech, language, and hearing scientists; audiology and speech-language pathology support personnel; and students.